LG’s buying of a chip design firm starts rumors

LG Group is moving to take over a major fabless semiconductor company in Korea, prompting speculation it may want to get back into the semiconductor business.

LG Corporation, the holding company of the group, held a board of directors meeting recently and decided to buy 20 percent of Silicon Works, the company said yesterday. The deal, projected to cost the company 86.5 billion won ($84.4 million), will make Silicon Works an affiliate of the company, it said.

Silicon Works designs - but doesn’t manufacture - display driver ICs (DDI) for smartphones, tablet PCs and TVs. The provider of DDIs for Apple’s iPad, the company is recognized for its DDI-related technologies.

LG said securing semiconductor design capability is indispensable for the competitiveness of its electronics business.

“Apple and other companies including AUO, Taiwan’s display manufacturer, are taking over chip design companies to strengthen their competitiveness,” said an official of LG Corporation. “Silicon Works has not only DDI-related technology but also technology related with integrated circuits for light-emitting diode lighting, car sensors and touch panels.”

Some market analysts think LG may want to come back to the semiconductor business, from which it withdrew with the sale of LG Semiconductor to Hyundai Group in 1999. Hyundai Semiconductor renamed itself Hynix Semiconductor in 2001, the predecessor of SK Hynix.

The analysts say LG’s next move in that direction would be buying Dongbu HiTek, a non-memory semiconductor maker that is up for sale as part of Dongbu Group’s restructuring plan.

If LG Corp. purchases Dongbu HiTek, it can have both the design and manufacturing system in semiconductor business. LG denies those rumors.

BY MOON GWANG-LIP SOHN HAE-YONG[joe@joongang.co.kr]